UPDATE 1-Debt insurance costs fall for range of US firms-CMA
(Updates with AMD and more detail)
NEW YORK, Oct 7 (Reuters) - The cost to insure a range of major U.S. financial, utility and industrial companies against debt default fell on Tuesday as world stocks ticked higher on expectations of rate cuts around the world.
Five-year credit default swaps of Merrill Lynch & Co MER.N fell to 317 basis points, or $317,000 a year to protect $10 million of debt, down from 434 basis points on Monday, according to data from CMA DataVision.
Credit default swap spreads for Cargill Inc, Goldman Sachs, Metlife Inc and General Electric Capital Corp also were broadly tighter, CMA said.
Debt protection costs for Advanced Micro Devices (AMD.N) fell as the computer chipmaker's five year credit default swaps slipped to an upfront payment of 25 percent the sum insured plus 500 basis points a year from 50 percent on Monday, according to CMA. That means it would cost $2.5 million to insure $10 million of debt plus $500,000 a year.
Typically swaps start trading on an upfront basis when spreads approach about 1,000 basis points, meaning insurance is sold at an annual 10 percent payment of the debt's face value over a five-year period.
Commodity-related credits widened on Tuesday, including Southern California Edison Co, Kinder Morgan Energy Partners and Agrium Inc, CMA said.
Oil prices rose by more than $5 a barrel on Tuesday after a big interest rate cut in Australia raised hopes that other countries would follow suit. For details, click on [ID:nSP97566], (Reporting by Walden Siew, Editing by Walker Simon)
